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Tuesday, August 26, 2008

Obama co-sponsors bill on soldiers and mandatory arbitration

by Deepak Gupta

Although the issue hasn't come up in the presidential campaign, those looking for clues about the presidential candidates' views on the ongoing debate over binding mandatory arbitration will want take note of a new piece of proposed legislation sponsored by Senator Barack Obama.

The Servicemembers Access to Justice Act of 2008 (S.3432), which will be considered by U.S. Senate's Committee on Veterans Affairs, would prohibit the enforcement of pre-dispute arbitration agreements in employment contracts between military service members and their employers. It is intended to improve enforcement of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). In a statement, Obama said: "Unfortunately, far too many of our brave men and women struggle to return to their daily jobs, or are denied the employment benefits they are owed. We must do everything we can to help our heroes when they return home, and I am proud to support this legislation." The lead sponsor of the bill is Bob Casey of Pennsylvania, also joined by Ted Kennedy of Massachusetts.

With regard to mandatory arbitration, the language in S.3432 roughly parallels the Arbitration Fairness Act: "Notwithstanding any other provision of law, any clause of any agreement between an employer and an employee that requires arbitration of a dispute arising under this chapter shall not be enforceable."

If S.3432 were enacted, that provision would settle the law on the arbitrability of USERRA claims. The federal district courts are divided on the issue and only two federal appeals courts have ruled on it. The first was the U.S. Court of Appeals for the Fifth Circuit, which held that these claims could be made subject to arbitration agreements. The Sixth Circuit followed that ruling on August 11 in Timothy Landis, O.D. v. Pinnacle Eye Care, LLC, dba VisionFirst et al. In a concurring opinion, however, Circuit Judge R. Guy Cole Jr. called on Congress to provide clearer guidance on whether members of the military may be required to arbitrate employment discrimination claims under USERRA.

S. 3432 contains two exceptions to the proposed ban on pre-dispute arbitration agreement in contracts of members of the military. One is for arbitration agreements entered into voluntarily and knowingly after a dispute arises. The other is for arbitration provisions in collective bargaining agreements. Significantly, the proposed bill would require courts, not arbitrators to determine the validity and enforceability of an arbitration clause, "irrespective of whether the party resisting arbitration challenges the agreement to arbitrate specifically or in conjunction with other terms of the agreement." It would also make federal law apply to those issues. If enacted, S. 3432 would apply to existing as well as future agreements between a member of the armed services and his or her employer. The proposed Servicemembers Access to Justice Act of 2008 has the support of the Iraq and Afghanistan Veterans of America.